Kitchen Culture subsidiaries enter into JV agreement in Hong Kong

KHLHK will hold 40% of the issued and paid-up share capital of the JVC.

The Board of Directors of Kitchen Culture Holdings Ltd. announced that its wholly-owned subsidiaries, KHL (Hong Kong) Limited and Kitchen Culture (Hong Kong) Limited, have entered into a joint venture agreement with unrelated third parties, Chan Ping Keung, Fung Chu Wan, and Chan Tak Man, for the establishment of a joint venture in Hong Kong.

Pursuant to the JV agreement, Kitchen Culture (Hong Kong) Limited will be used as the joint venture company and KHLHK, Chan Ping Keung, Fung Chu Wan, and Chan Tak Man shall participate in the increase in share capital of the JVC in the proportion of 40:30:22:8, respectively.

Following the completion of the JV agreement, the JVC will cease to be a wholly-owned subsidiary of the company and become a 40%-owned joint venture company of the company, held through KHLHK. The JVC was recently incorporated in October 2011 and has been loss-making to date.

The issued and paid-up share capital of the JVC will be increased from HK$1 to HK$10 million by way of allotment and issuance of 9,999,999 ordinary shares of HK$1.00 each, which will be subscribed by KHLHK, Chan Ping Keung, Fung Chu Wan and Chan Tak Man such that the final proportions after the allotment of shares shall result in the agreed proportion.

The paid-up capital of HK$10 million will be applied towards the working capital of the JVC.

The company will transfer the existing one ordinary share it holds in the JVC to KHLHK for a cash consideration of HK$1.00. KHLHK’s subscription of 3,999,999 shares in the JVC will be financed by capitalising existing shareholders’ advances of HK$3,999,999 owing by the JVC to KHLHK. These shareholders’ advances were funded from the proceeds of the Group’s initial public offering in July 2011.

As a result, KHLHK will hold 40% of the issued and paid-up share capital of the JVC upon completion of the JV agreement while Chan Ping Keung, Fung Chu Wan and Chan Tak Man will hold 30%, 22% and 8% respectively.